A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body.
Bulls failed to regain control over D-Street as Nifty50 slipped below crucial moving average such as 5-day exponential moving average (EMA), 20-EMA, as well as 13-EMA in a single day and made a ‘Bearish Belt Hold’ kind of pattern on daily charts on Monday.
A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body. The candle will either have a small or no upper shadow and a small lower shadow.
The index slipped below crucial short-term moving average and the next crucial support is now placed at 11,250 which was the swing low formed on 12 September. On the other hand, for bulls to take control, Nifty50 has to reclaim 11,520 levels.
related news
The Nifty50 opened at 11,464 and slipped below 11,400 to touch its intraday low of 11,366 before closing the day at 11,377 down 137 points.
“The Nifty50 resumed its downswing with a Bearish Belt Hold formation as weekend review of the economy appears to have failed to impress the market participants with rupee going back to square one,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Technically speaking, as Monday’s down move filled the bullish gap present in the zone of 11,430 to 11,380 levels, registered on last Friday, it can be expected to initially test the recent corrective swing low of 11250 levels,” he said.
Mohammad further added that in such a scenario an ideal downside target for this fresh leg of downswing appears to be placed between 11,100 – 11,000 kind of levels. For time being upsides shall remain capped around 11,520 levels.
India VIX moved up by 5.36 percent at 14.58. On the options front, maximum Put OI is placed at 11,400 followed by 11,000 strikes while maximum Call OI is placed at 11,800 and then towards 11,600 strikes.
Fresh Call writing was seen at 11,500 followed by 11,600 strikes while Put unwinding was seen at all immediate strike price.
“The Nifty index opened gap down and remained under pressure for the entire trading session to settle near day’s low. It formed a Bearish Candle on a daily scale which suggests selling pressure is witnessed at higher levels and failed to close above 11,400 zones,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Now till it holds below 11,450 zones it can slip towards 11,333 then 11,250 zones while on the upside hurdle is seen at 11,450 then 11,500 zones,” he said.